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Health Care Foundation Gift Planning

The many philanthropic friends who live and work in the communities served by North Mississippi Health Services share an important value--their commitment to the health and well-being of family, friends, and neighbors. They also share a profound understanding of the powerful impact such a commitment has on our community, not only today, but also for future generations. Together, these friends have established a legacy of healing.

As you may know, the nation's tax laws provide incentives that encourage philanthropy because of the singular role charitable organizations, like our hospitals and programs, play in meeting the important needs of society. Many people are unaware of the many benefits that charitable financial planning can offer them in structuring a gift.

These guidelines are intended to show some ways you can benefit from our programs and minimize your federal tax liability, with examples of anticipated federal tax results. They are not intended as legal advice and should only be used as educational information. You should always consult your advisors on tax related matters affecting your specific situation. We welcome the opportunity to supply you with additional information about any of these methods of giving and to discuss with you and your advisors how you might consider making your gift.

Invitation to Join the CARE Society

The power of giving transcends time--it begins today to shape and form tomorrow's realities. The desire to leave a legacy of health to future generations may be expressed in many ways. Health Care Foundation's CARE Society recognizes those who make decisions to provide for North Mississippi Health Services hospitals or programs through planned or deferred gifts, including bequest intentions, charitable trusts, gift annuities, and other vehicles.

The CARE Society is comprised of friends in the community and those closest to our mission; it recognizes all those who include the Foundation in their planned gifts.

These special friends help to perpetuate our Compassion, Advocacy, Resourcefulness and Excellence of health care for the people of this region. Planned gifts to Health Care Foundation of North Mississippi provides the resources to ensure future excellence in patient care, education and clinical research. It also ensures NMHS as a health care leader. You are invited to join this devoted group of friends dedicated to sustaining the continued health of our community and to ensuring the best possible care for future generations.

For more information about joining the CARE Society, or if you have already decided to include us in your estate plans, please call Dean Hancock at (662) 841-3613.

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Gift By Will or Living Trust

The Epitome of Planned Giving

A bequest is the most traditional way to provide significant help for worthwhile causes. With a gift through your will or living trust, you retain full use of your gift property during your life. We have listed several common forms of charitable bequests with the hope that one type of bequest will fit your individual needs. Further information is available upon request. Suggested language for any bequest can be found in the following descriptions.

General Bequest: The most familiar type of bequest is the general bequest, which specifies that we will receive a designed sum. For example, you might make a general bequest of $10,000. You may prefer this arrangement because it is considered a primary charge against your estate-which means it will almost certainly be fulfilled. Sample language for this type of bequest is as follows: "I give Health Care Foundation of North Mississippi the sum of $_________ [to be used by the (insert name of hospital or program) for its general purposes or according to a letter of intent previously agreed to by the Foundation and me].

Percentage Bequest: This is an excellent alternative to the general bequest. The percentage bequest states that we will receive a certain predetermined percentage of your estate. By making a percentage bequest of 10 percent, for example, you assure yourself that inflation will not reduce the true value of the bequest you intended for our benefit.

Specific Bequest: When making a specific bequest, you are directing that one particular property be transferred to us, such as a certain piece of real estate, the stock from one specific company or some other specific property. This type of bequest is ideal for individuals wishing to give particular stocks or a valuable art object. Caution: A specific bequest can be satisfied only with the property designated. If that property has been sold or otherwise removed from the estate, we receive nothing in its place.

Residual Bequest: A residuary bequest gives all, or a stated portion thereof, of a benefactor's property, after all debts, taxes, expenses, and all other bequests have been paid. Sample language for this type of bequest is as follows: "I give Health Care Foundation of North Mississippi _____ percent of the residue of my estate [to be used by the (insert name of hospital or program) for its general purposes or according to a letter of intent previously agreed to by the Foundation and me].

Contingent Bequest: A contingent bequest anticipates an unexpected occurrence. If specific conditions exist, a contingent bequest ensures that property passes to the Foundation rather than intestate. Sample language for this type of bequest is as follows: "In the event that _______________ predeceases me, I give Health Care Foundation of North Mississippi the sum of $_____________ (or, alternatively, ____ percent of the residue of my estate) [to be used by the (insert name of hospital or program) for its general purposes or according to a letter of intent previously agreed to by the Foundation and me]."

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Gifts of Closely Held Stock

Share Your Success

Owners of closely held corporations have a problem whenever they try to get money out of their businesses for personal use. The IRS invariably says: "Owner, we consider that you have received a stock dividend, and we are going to tax you accordingly." There is a way, by which the owner can receive a substantial benefit from his company, not have to pay any tax and assist in our programs as well. Let's take the fictitious Jones Incorporated, for example. Miss Smith owns 90 percent of the corporation and decides to give a few shares of her stock--worth, say, $10,000, to benefit pediatric care. The gift of stock leaves her in full control of the business and, realistically, costs her nothing personally. Yet she is entitled to a $10,000 charitable deduction, which would save her $3,600 in taxes, assuming a 36 percent income tax bracket. We have no reason to keep the stock shares and therefore turn them in to the corporation for redemption. The corporation gives us $10,000 to use in our work in children's health and retires the stock. The IRS has ruled that Miss Smith won't be considered to have received a dividend--even though she has removed $10,000 from the corporation--so long as we are not required to turn back the shares of stock to her corporation.

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Gifts of Appreciated Securities

A Tax Savings Bonanza

If you have marketable securities that have gown substantially in value, the tax laws make it possible for you to make an important gift a remarkably low after-tax-cost. Indeed, under the right circumstance, a benefactor could make a gift worth $100,000 at a cost of as little as $32,400. A lifetime gift of appreciated securities generally qualifies not only for the income tax deduction associated with all lifetime charitable gifts, but it also avoids the long-term capital gains tax on your paper profit. Usually, a sale of appreciated securities results in a tax on your full gain--meaning that you keep only part of the profit. But if appreciated securities are given to a qualified charitable organization, there is no tax on your gain, even though your "profit" is counted as part of your charitable deduction. Here are the rules for giving appreciated securities or other property. The full fair market value of the property, if you have owned it more than one year, is deductible in the year of the gift. If the gift, coupled with other gifts, exceeds 30 percent of your adjusted gross income (the maximum deduction allowable for the most gifts of appreciated property), the excess can be carried over and deducted in up to five subsequent years. No matter how much the property has appreciated in value, you pay no capital gains tax on your paper profit. Important: The securities should be transferred to Health Care Foundation of North Mississippi to avoid capital gains. If you contribute assets other than publicly traded securities, you will need a qualified appraisal if the value is more than $5,000.

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Top How to Make a Gift of Securities (Stocks, Bonds, etc.)


Here are the steps for giving your appreciated stocks and bonds.

If Your Broker Holds the Shares:

  1. If your securities reside in a brokerage account, ask your broker to transfer the specified shares to Health Care Foundation of North Mississippi.
  2. If your broker has questions about making an electronic gift of securities, please have your broker contact Health Care Foundation at (662) 841-3613.
  3. The gift will be valued on the date the securities are received into the Foundation's account. The value will be the mean of the high and the low trades on the date the gift was received.
  4. You should not allow your broker to sell the securities and send us a check. If the broker does this, the tax advantages of making the gift may be eliminated.

If You Hold the Certificates:

Please mail or deliver the certificates (first class mail) without any endorsement or assignment along with a letter stating the purpose of your gift to the:

Mailing Address: Health Care Foundation of North Mississippi
830 South Gloster Street
Tupelo, MS 38801

Street Address: Health Care Foundation of North Mississippi
216 West Main Street
Tupelo, MS 38801

In a separate envelope, please send one endorsed Stock Power Form per certificate to the above address. You will need to guarantee the signature on the stock power form. This is different from having a document notarized. Most banks provide a signature guarantee service. You should endorse each form exactly as your name(s) appear on the front of your certificate(s). You do not need to include any other information on the form.

The stock certificates will not be negotiable until we have received both envelopes.

The gift will be established from the later postmark or stamped received date of the two envelopes. The value will be the mean of the high and the low trades on the gift date.

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Gifts of Real Estate

Real Estate is a Great Gift

The tax benefits available for gifts of appreciated real estate are virtually identical to those for gifts of appreciated securities. First, you avoid capital gains tax on your profit. Second, you receive an income tax charitable deduction for the full fair market value of the property you contribute. Gifts of appreciated real property such as undeveloped land, farms or personal residences may be transferred by deed with no liability for income or estate taxes on the appreciation.

Life Estate Reserved: If you own your home or farm--or even a vacation home--you may be able to make a gift of the property, obtain an immediate income tax deduction and still continue to use the property for as long as you wish. How does this work? Simply give the property to us, but retain the right to use it for your life. You can continue to live in your home or work your farm, just as before. Only after your death will we assume the usual ownership rights in the property. By setting up this gift now, rather than in your will, you will receive an immediate income tax deduction for the present value of our future right to receive your property.

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Qualified Retirement Plan Assets

The Gift Asset for the Future

Your estate can save both income taxes and estate taxes if you make us a death beneficiary of your individual retirement account, pension, 401(k) or other retirement savings plan. You also can arrange for lifetime income to be paid to a family member after your death from retirement funds, with our benefit coming later, or make us an alternative or contingent beneficiary.

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Charitable Remainder Unitrusts

The Classic Planned Gift

A unitrust is an arrangement in which you irrevocably place money or property with a trustee, with instructions to pay someone (probably yourself) income, generally for life. The income will be a set percentage of the trust's value, which may change from year to year. When the person receiving the income dies, the property remaining-the "remainder"-can pass to Health Care Foundation of North Mississippi.

By designating the Foundation as the remainder beneficiary, you'll provide yourself with an income tax charitable deduction. And that's not all. Depending on your planning needs, you can arrange for:

  • Increased income for your family
  • Capital gains tax avoidance
  • Increased income at retirement
  • Diversion of income to a family member in a low tax bracket
  • Estate tax savings
  • Avoidance of gift tax
  • Professional investment of your funds
  • A hedge against inflation
  • Reduced estate settlement costs

People have been using unitrusts for many years to assist them in their personal, financial, tax and philanthropic planning. It's a singular opportunity for you, a private individual, to have a tax-exempt trust working for you. Most important, the unitrust is a proven, time-tested way for you to provide for our future while you satisfy personal and family financial needs.

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Charitable Remainder Annuity Trust

Fixed Income with a Flexible Payout Percentage

Annuity trust provide a fixed dollar amount to the beneficiary(ies). A benefactor irrevocably transfers cash or a readily marketable security to a trustee who invests and reinvests the assets as a separate legal entity. Prior to the trust's implementation the amount of income payment is arrived at by taking a percentage of the market value of the asset(s) transferred and this irrevocable, fixed dollar amount will be agreed upon and stated in the trust agreement. The minimum annual payout rate must be at least 5 percent of the initial gift amount but may exceed that by agreement between the benefactor and the Foundation. In accordance with the Taxpayer Relief Act of 1997, the present value of the remainder interest must be at least 10 percent of the FMV of the original gift at the time of the trust's funding.

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Charitable Gift Annuities

Yearly Annuity Payments

A charitable gift annuity is an agreement between you and Health Care Foundation of North Mississippi. You agree to make a gift of cash or appreciated securities to a hospital or program of interest to you. In turn, we invest these funds and agree to pay a fixed percentage of income to you every year. The yearly income amount is determined by your age at the time of your contribution. The older you are, the higher your rate is; the rate remains constant once the gift is made. Minimum support levels have been established to guarantee that the income will be adequate to achieve the benefactor's intent.

Benefits Per $10,000 Contributed: Annuity Payments To One Beneficiary (Fixed Payout)

Age of Beneficiary
Suggested Payout
Annual Payment
Deduction* Per $10,000
55
6.5%
$650
$3,526
60
6.7%
$670
$3,825
65
7.0%
$700
$4,137
70
7.5%
$750
$4,426
75
8.2%
$820
$4,740

*Assumes use of 8% applicable federal rate with quarterly payments.

A variety of tax and financial benefits are available. Through a charitable gift annuity a portion of your income payments may be tax-free. Capital gains taxes can be minimized if you use highly appreciated assets to fund your gift. Furthermore, you will be entitled to a substantial income tax charitable deduction in the year you make the gift.

Deferred Charitable Gift Annuity-A Boost to Retirement Income


In planning your charitable gift annuity, you may elect to begin receiving income right away. Or, instead of receiving an immediate payment, you might choose to defer it until a later date, such as when your retire.

It works like this--you make a charitable gift now, securing a current income tax charitable deduction and Health Care Foundation agrees to pay you a guaranteed life income staring at any date you select. This is especially advantageous if your tax bracket is higher now than it will be later. In addition, the annual income rate is considerably higher when the payments begin.

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CHARITABLE LEAD TRUST

The Returning Gift

A charitable lead trust pays the trust's income to Health Care Foundation and distributes the remainder after a specified number of years to non-charitable beneficiaries. A lead trust allows property to be transferred to family beneficiaries at a lower transfer cost (e.g. avoidance of capital gain tax on appreciation) and therefore, is particularly attractive to benefactors who transfer property with a high appreciation potential.

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LIFE INSURANCE

Gifts of Policies

You can name Health Care Foundation or North Mississippi Health Services hospital or program the beneficiary of your life insurance--just contact the company. A better idea may be to transfer actual ownership of the policy to us, or buy a new policy for our benefit. If you do so, your gift will entitle you to an income tax deduction, and future premium payments will be tax deductible.

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ENDOWMENTS

Endowments enable the delivery of exceptional health care into the future. Benefactors create endowments for the Foundation, hospital or program to perpetuate their personal values and contribute to the hospital's or program's continuing ability to heal, to educate and to serve.

Endowed gifts are held in perpetuity. We invest the initial gift and spend only a portion of the average annual investment return. The remaining income is reinvested with the principal as protection against the eroding effects of inflation. Thus, the benefactor who makes an endowment gift today finds gratification in knowing that it will grow and continue to support its intended purpose far into the future.

Endowments function to blend values of the benefactor with the needs and objectives of the hospital or program they choose to support. Thus, a dynamic, ongoing relationship is established based on our shared beliefs, hopes and visions of what the future holds possible. Working together, Health Care Foundation and the benefactor create a distinctive endowment that reflects their common goals.